Xero Tip - Transfer Rules

By Beau Gaudron on Thursday April 29th, 2021

Creating a Transfer Rule

Once you login to Xero the first step is to find a transaction that is actually a transfer to another account.

Now - to get to the rule screen we need to click on "Options" then "Create Bank Rule"

Creating the Rule

Now on the Create Rule page the first thing we want to do is click on the tab "Transfer Money Rule"

This will take us to the rule creation screen for transfers.

Setting Parameters of your Transfer Rule

On the Transfer Money Rule tab you can set the criteria of when the rule will run.

It's best to make the rule match with less criteria rather than more to ensure that it operates. So In section one we are going to make the criteria "Payee contains" instead of "equals"

Once you have done that, in Section 2 you can specify if you want to be asked which account to transfer to - or - if you just want to preset this to be a certain account.

In our example our rule will always match to be a transfer to our Mastercard Gold account so we'll set the transfer to be to that Account.

For Step 3 - set the reference you should be able to safely ignore this and leave it as its default.

For Step 4 - target a bank account, if you have multiple accounts that you want the rule to run against you can select to run on all accounts. In our example we are only going to run the rule on our "Transaction Account"

Now - the second last step, give the rule a title. We suggest calling this something that reminds you what the rule is doing. In our case we'll set it to "Transfer to Mastercard Gold"

The last step is to save the rule. Once saved we can go and make sure it works on the bank reconciliation screen!

Checking your rule works

After you've saved your rule you should be taken back to the bank reconciliation screen.

If you've created your rule correctly you should be able to see that Xero is now suggesting to "apply" the rule to the transaction you created the rule from as shown below

If the rule does not work, you will need to click on "Manage Account" and then "Bank Rules" and edit the rule you made. More than likely the criteria is not matching to the bank transaction if this occurs and adjustments will be required.

Reconciling the Transfer

If your rule worked you simply need to click on "OK" to reconcile

However

Remember that this only does one side of the transaction, you will still need to reconcile the transaction where the transfer was sent to. Example of this is shown below

One of the most common mistakes when reconciling transfers is clicking OK against the wrong transfer. Always check to make sure that your transfers line up to the appropriate dates on both the left hand and right hand side of the bank reconciliation. For most banks the transfers will be dated the exact same day, some credit cards though may have a lapse of 2 days.